Bloomsbury blog NZ isn't saving enough

Bloomsbury blog post, 03 May 2026

We recently read this article from Visual Capitalist, which places New Zealand dead last in a comparison of household savings rates across the OECD. Are New Zealand households really saving less than their peers in other countries? Below we examine what New Zealand's low savings rate means, why saving seems easier in Australia, and what we can do about it.

What is the household savings rate?

The household savings rate is the share of household income not spent on consumption in a given period. Officials measure the gap between disposable income and spending across the economy, then express it as a rate.

The household savings rate should be interpreted carefully, but like a compass it indicates which direction the trend is moving. Many households spend money on paying down debt or renovating a home, choices that can count as spending, despite these decisions potentially leading to a stronger financial position in the future.

Our lowly savings rate in detail

The OECD data used in the article reports a negative household savings rate of 1.3% in New Zealand in 2023 – meaning households collectively spent 1.3% more than they earned as measured by government officials.

At the top of the pack was Sweden, where households managed to save 16.0% of their earnings. Across the 29 OECD countries listed, the average household savings rate was 6.5%. One noticeable name among the OECD comparators was our neighbour across the ditch – Australia, who reported a strong 6.1% household savings rate.

Is this a one-off? Did we just have a bad year? Reasonable questions, especially when the OECD data compared annual savings rates across countries from different years between 2022 and 2025 depending on availability. It is worth noting that 2023 was an especially difficult year for Kiwi household budgets, coinciding with peak interest rate pressure as the Reserve Bank's tightening cycle took hold. However, Statistics New Zealand data paints a persistent picture of low saving rates: since 1987, New Zealand's annual household savings rate has averaged 0.1%.

Contrasting with our lowly savings, Australian households have averaged an annual savings rate of 5.2%. While some measurement differences between countries means a like-for-like comparison might be inaccurate, the long-run data still supports a point many Kiwis have been making for a long time: Australian households tend to look more financially secure.

This gap is worth taking seriously because it points to policy design and economic incentives that Australia seems to be getting more right than we do here.

Is this a problem?

It is not the end of the world for a family to run a lean year, pay down debt, or support a child through study. Those can be purposeful choices. Nationally, though, softness matters. From our point of view, New Zealand's consistently low savings rate highlights how narrow the average household buffer has become. It shrinks the buffer for unexpected shocks like job loss, illness, or rising mortgage rates. Individually, events like that can be devastating for a family, and on aggregate they could amplify the impact a global downturn might have on the country.

It is also worth acknowledging that the headline savings figures miss something real: many New Zealand households have been "saving" through paying off real estate debt. That form of saving does not show up in the official savings measure, and for a lot of families it has made a genuine difference to their financial position. The shift now, as property returns become less reliable, is an opportunity for that same accumulation instinct to be redirected into diversified financial savings – and that transition is one we help our clients navigate every day.

None of that is comfortable to dwell on, yet it is also the kind of reality that financial planning is built for. Within the policy settings as they exist, how can you plan to improve your situation, build a resilient financial position, and achieve your goals?

What Australia does that we don't

Australia is not a mirror image of New Zealand, and direct comparisons are imperfect. Even so, there are features of their settings that help explain why household savings show up more reliably across the Tasman. One key feature is their superannuation scheme. New Zealand trails far behind here in several ways:

1. While we are increasing minimum employer contributions, we are only increasing them to 4% of salary – Australia increased their minimum employer contribution to 12% of salary last year. In fact, Australia's minimum employer contribution rate was already 9% in 2002!
2. We still require matching employee contributions, stripping money out of household budgets that could be put towards paying down debt.
3. There are no tax advantages to additional contributions to KiwiSaver or other retirement accounts – despite many of New Zealand's peers creating tax incentives for long-term savings like before-tax salary sacrifice contributions under the Australian scheme, the Canadian tax-free savings accounts (TFSA), and the tax-advantaged individual retirement arrangements (IRA) in the US.

That said, KiwiSaver could still make a difference. If contribution rates continue to rise, New Zealanders should be saving more towards retirement. Well-designed policy shifts behaviour, and indicators suggest that we're shifting in the right direction.

In addition to Australia's superannuation setting, there is also the perception that the income-adjusted cost-of-living in Australia is generally better than in New Zealand. Comparing the average standard of living between two countries is difficult to boil down to one number – while incomes tend to be higher in Australia, so do expenses.

However, a speech given by the Chief Economist of the Reserve Bank of New Zealand this year indicates that average income in Australia is still higher even after accounting for their higher cost-of-living - their households have more purchasing power and since COVID, the gap is growing.

This extra disposable income might also contribute to their higher household savings rate. Not only is their government retirement scheme set up to incentivise a higher savings rate, but their economy is set up to support extra savings too.

There is also a cultural dimension worth naming: New Zealand's universal superannuation entitlement (which is rare across today's developed nations) means many households feel less urgency to save independently for retirement, operating on the assumption that the government will provide. That assumption carries more risk than it once did, and households that plan beyond NZ Super consistently end up in a materially stronger position.

Where that leaves us

New Zealand's low savings rate is not simply a result of household behaviour - we aren't living large and failing to plan for the future. In practice, savings are often what is left over after we've taken care of mortgages, school costs, repairs, and helping our children.

The more limited purchasing power of New Zealand households stems from living in a high-cost, low-productivity economy. Having a lower portion of household income available to be saved is a natural consequence of that.

But there are reasons to be optimistic. Recent productivity data released by Statistics New Zealand indicates New Zealand is currently in a productivity growth cycle, with labour productivity increasing 0.8% in 2025 – driven by Kiwis producing more with less. This matters more than it might seem: rising productivity feeds through into higher real incomes over time, which creates the conditions for improved household savings across the board. If we can sustain this trajectory, we have a genuine opportunity to increase the disposable income of the average New Zealand family – and with it, their capacity to save.

Even within current budget constraints, we still see households make material progress when the intention is right – clear goals, balance between the present and the future, investing savings correctly, having the discipline to stick to the plan, and the flexibility to adjust as life happens.